May 29th

Ivanhoe Energy to acquire oil sands assets from Talisman Energy

Athabasca block will be home for Ivanhoe\'s first integrated HTL heavy-to- light oil project

Robert Friedland, Deputy Chairman of Ivanhoe Energy Inc. (TSX: IE; NASDAQ: IVAN), announced today that the company has signed a preliminary agreement with Talisman Energy Canada (Talisman) to acquire all of Talisman\'s interests in three leases located in the heart of the Athabasca oil sands region in the Province of Alberta, Canada. Talisman Energy Canada is an affiliate of Talisman Energy Inc. (TSX:TLM; NYSE:TLM).

The total purchase price is C$105 million, of which C$30 million is payable at closing. The transaction will see the first commercial application of Ivanhoe Energy\'s proprietary HTL(TM) heavy-oil upgrading technology in a major, integrated heavy-oil project. Based on the most recent evaluations of the Talisman leases conducted by Sproule Associates Limited (\"Sproule\"), independent reservoir engineers, two of the three leases are estimated to contain, on a best estimate basis, approximately 294 million barrels of contingent bitumen resources (with low and high estimates of approximately 216 million and 394 million barrels, respectively) out of approximately 752 million barrels of discovered petroleum initially-in-place.

The proposed home for Ivanhoe Energy\'s initial, integrated HTL heavy-oil project will be Lease 10, near Fort McMurray. Based on estimates by Sproule of contingent bitumen resources, Lease 10 - the principal block being acquired - would be capable of producing between 30,000 and 50,000 barrels of oil per day.

Talisman will retain back in rights of up to 20% in all of the acquired leases for a period of three years. During this period, Talisman will also have the right of first offer to acquire any participation interests in heavy oil projects in Alberta that Ivanhoe wishes to sell, excluding the acquired leases, on mutually agreeable terms. In addition, in order to allow Talisman to effectively monitor the commercial effectiveness of Ivanhoe\'s HTL technology, Ivanhoe and Talisman will sign an HTL Data Monitoring Agreement.

\"We now have achieved our initial objective,\" said Mr. Friedland. \"We are anchoring the roll-out of our HTL heavy-oil upgrading process with a first-class, high-quality resource asset in the centre of the Athabasca oil sands region. We will now proceed full speed ahead with preparations for an integrated HTL heavy oil project on Lease 10, while at the same time progressing discussions relating to additional heavy oil opportunities in Canada and internationally\".

Lease 10 to be site for Ivanhoe\'s first HTL integrated heavy-oil project

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Ivanhoe Energy plans to establish its first commercial HTL heavy-oil project on the Lease 10 block, the principal lease to be acquired from Talisman.

Lease 10 is a 6,880-acre contiguous block located approximately 10 miles (16 km) northeast of Fort McMurray, immediately south of Suncor\'s operating Steepbank and Millennium projects. The block also adjoins leases held by ExxonMobil, Laricina Energy and E-T Energy. Talisman has a 100% working interest in Lease 10.

Lease 10 has a relatively high level of delineation (four wells per section). It is believed to be a high-quality reservoir and an excellent candidate for thermal recovery production using the SAGD (steam-assisted gravity drainage) process. The Lease 10 reservoir characteristics are believed by Ivanhoe to be similar to those at Petro-Canada\'s 30,000 barrels per day MacKay River project, nearby across the Athabasca River. MacKay River is acknowledged to be one of the most successful and longest running SAGD projects in the Athabasca oil sands.

Ivanhoe \'s HTL plant on Lease 10 is projected to ultimately be capable of operating at production rates of at least 30,000 barrels per day for approximately 25 years. Ivanhoe intends to integrate established SAGD thermal recovery techniques with its patented HTL upgrading process, producing and marketing a light, synthetic sour crude.

Once this acquisition has closed, Ivanhoe will continue the Lease 10 delineation program in preparation for the submission of permits for an integrated HTL project. In general, thermal oil sands projects, including SAGD projects, require a period of initial development, including delineation, permitting and field development, which is followed by relatively stable operations for many years. Ivanhoe will provide guidance on expectations regarding development timelines, as appropriate, at a future date.

Lease 50 is a second potential HTL site

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Lease 50, another lease to be acquired from Talisman, covers a 21,760 gross acre block located approximately 12 miles (19 km) southeast of Fort McMurray. The block is bordered by Imperial Oil (a subsidiary of ExxonMobil) on three sides and also is adjacent to leases owned by Opti/Nexen and Canadian Natural Resources (CNRL). Talisman has a 75% working interest in Lease 50, which is subject to a right of first refusal in favour of the holder of the remaining 25% working interest.

Although less delineated than Lease 10, based on drilling to date Ivanhoe believes that Lease 50 has the potential to host an additional integrated HTL heavy-oil project. The total plant size required to develop and produce the low, best and high estimates of the contingent resources assigned to Lease 50 has previously been estimated to be 10,000 bopd, 15,000 bopd and 25,000 bopd, respectively.

Benefits of HTL Integration

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HTL is a field-located upgrading process that converts heavy oil to a transportable, partially upgraded synthetic crude oil and converts the upgrading byproducts to onsite energy. The process frees the heavy oil producer from the need to purchase diluent for transport, significantly eliminates the need to purchase natural gas to steam the reservoir, and allows the producer to capture the majority of the heavy oil-light oil value differential. The net result is enhanced rates of return and reduced earnings volatility. Furthermore, the HTL process is technically and economically scalable down to as low as 10,000-30,000 bopd, allowing for vertical integration of smaller heavy oil assets in Canada and internationally.

Transaction highlights

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A binding preliminary agreement between Ivanhoe Energy and Talisman outlining the key transaction terms was entered into on May 29, 2008. The transaction, expected to close within 45 days, is subject to certain conditions, including completion of definitive transaction documentation and regulatory approval, including approval of the Toronto Stock Exchange.

    
    Purchase details

    Ivanhoe will purchase all of Talisman\'s interests in Leases 10, 50 and 6.
The total purchase price for the three leases is C$105 million, allocated as
follows:

    1.  C$30 million cash, due upon closing.

    2.  A C$20 million note, with interest at prime plus 2%, to be repaid on
        or before December 31, 2008.

    3.  A C$40 million, three-year convertible note, with interest at prime
        plus 2% with principal convertible at C$3.13, which represents a 25%
        premium to Ivanhoe Energy\'s share price based on the volume-adjusted,
        weighted average closing price for the 10 business days prior to the
        signing of the preliminary agreement. If the note were fully
        converted, 12,779,552 common shares of Ivanhoe Energy would be issued
        to Talisman, representing approximately 4.95% of the issued and
        outstanding shares of Ivanhoe Energy as of today\'s date after giving
        effect to the conversion.

    4.  C$15 million cash on Ivanhoe Energy receiving requisite government
        and other approvals to develop the northern border of Lease 10, which
        is subject to a Mineral Surface Lease (MSL) held by Suncor.
    

Ivanhoe\'s obligations under the notes and the contingent payment will be secured. Acquisition of Lease 50 is subject to the remaining working interest holder not exercising its right of first refusal in respect of Lease 50, in which case the purchase price would be adjusted accordingly.

Ivanhoe intends to finance the $30 million initial payment as well as future payments with funds from a combination of strategic investors and/or traditional debt and equity markets, either at the Ivanhoe Energy Inc level or project levels.

Talisman will retain back in rights of up to 20% in all of the acquired leases for a period of three years. During this period, Talisman will also have the right of first offer to acquire any participation interests in heavy oil projects in Alberta that Ivanhoe wishes to sell, excluding the acquired leases, on mutually agreeable terms. In addition, in order to allow Talisman to effectively monitor the commercial effectiveness of Ivanhoe\'s HTL technology, Ivanhoe and Talisman will sign an HTL Data Monitoring Agreement.

    Lease details and resource estimates

    Ivanhoe Energy has agreed to acquire the following leases:

    a)  A 100% working interest in Lease 10, a 6,880-acre oil sands lease
        located approximately 10 miles (16 km) northeast of Fort McMurray and
        immediately south of Suncor\'s operating Steepbank and Millennium
        projects.

    b)  A 75% working interest in Lease 50, a 21,760 gross acre oil sands
        lease located approximately 12 miles (19 km) southeast of Fort
        McMurray, adjacent to leases owned by Opti/Nexen, Imperial Oil and
        CNRL.

    c)  A 100% working interest in Lease 6, a small, 680-acre block one mile
        (1.6 km) south of Lease 10.
    

Based on the most recent evaluations conducted by Sproule, Lease 10 and Lease 50 together are estimated to contain, on a best estimate basis, approximately 294 million barrels of contingent bitumen resources (with low and high estimates of approximately 216 million and 394 million barrels, respectively). All such resource estimates have been classified as \"contingent resources\". Lease 6 has not been independently evaluated. The evaluation of Lease 10 has an effective date of August 31, 2007, while Lease 50 was evaluated as of July 31, 2006. The same reports estimate the discovered petroleum initially-in-place (which includes the contingent resource volumes) for Lease 10 and Lease 50, in aggregate, to be approximately 752 million barrels of bitumen on a best estimate basis. The portion of discovered petroleum initially-in-place not currently classified as contingent resources does not represent recoverable volumes.

Lease 10 is more delineated than Leases 50 and 6. Accordingly, the estimate of recoverable volumes is anticipated to have a higher degree of certainty. Of the total amount of contingent bitumen resources estimated to be contained in all three leases, Sproule has attributed, on a best estimate basis, approximately 244 million barrels of contingent bitumen resources to Lease 10 (with low and high estimates of approximately 188 million and 313 million barrels, respectively) and approximately 50 million barrels of contingent bitumen resources to Lease 50 (with low and high estimates of approximately 27 million and 81 million barrels, respectively).

The Lease 10 resource target is considered to be of high-quality McMurray sands, with clean and continuous average net pay of approximately 20 meters and no significant top or bottom water or top gas issues. The average porosity is 34%, average bitumen saturation is 79% and permeabilities are between one and 10 Darcies, all of which are considered excellent reservoir characteristics. The high quality of the asset is expected to provide for favorable projected operating costs, including attractive steam-oil ratios (SOR) using SAGD development techniques.

Based on these contingent resource estimates, Ivanhoe\'s acquisition price of C$105 million represents a price of approximately C$0.36 per barrel of contingent bitumen resource measured on a best estimate basis, with a range of approximately C$0.27 per barrel on a high estimate basis to approximately C$0.49 per barrel on a low estimate basis.

Financial Advisor

Tristone Capital Inc. is acting as financial advisor to Ivanhoe for this transaction.

Ivanhoe Energy

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Ivanhoe Energy is an independent, international heavy-oil development and production company focused on pursuing long-term growth in its reserves and production using advanced technologies, including its proprietary, patented heavy-oil upgrading process (HTL). Core operations are in the United States and China, with business development opportunities worldwide. Ivanhoe Energy\'s shares trade on the NASDAQ Capital Market with the ticker symbol IVAN and on the Toronto Stock Exchange with the symbol IE.

On March 17, 2008, Ivanhoe Energy announced that Robert Friedland would be assuming the leadership of Ivanhoe Energy Inc. and would serve as Executive Chairman and Chief Executive Officer to guide the company through a major corporate and management restructuring in preparation for the implementation of multiple, full-scale, commercial HTL heavy-oil projects in Canada and internationally.

The restructuring is planned to enhance Ivanhoe Energy\'s pursuit of its central mission to develop heavy-oil assets using its HTL technology.

As part of the reorganization, Ivanhoe Energy is establishing a number of geographically focused, self-funding entities. The parent company Ivanhoe Energy Inc. will pursue HTL opportunities in the Athabasca oil sands of Western Canada and will hold and manage the core HTL technology. Two new subsidiaries will be established, one for Latin America and one for the Middle East & North Africa, complementing Sunwing Energy Ltd., Ivanhoe Energy\'s existing, wholly owned company for China. Dave Martin will lead the subsidiary for Latin America as Chairman and CEO, and Leon Daniel will lead the subsidiary for the Middle East & North Africa as Chairman and CEO. Ivanhoe Energy Inc. initially will own 100% of each of these subsidiaries, although the percentages would be expected to decline as they develop their respective businesses and raise capital independently.

This structure will allow the development and financing of multiple HTL projects around the world, while minimizing dilution of Ivanhoe Energy\'s existing shareholders. In addition, the alignment with principal energy-producing regions will facilitate financing from region-specific strategic investors, some of which already have been identified, and also will enhance flexibility in accessing global capital markets.

Building an execution team

Over recent months, Ivanhoe has made significant progress in building its execution teams in preparation for this acquisition. The upstream team consists of a number of Calgary-based, experienced heavy oil engineers and geologists hired from firms such as Petro-Canada and Synenco, complemented by a core team of petroleum engineers and geologists located in Ivanhoe\'s offices in Bakersfield, California, a number of which are expected to move to Calgary, Alberta in the summer of 2008. The Houston-based HTL technology team also has been strengthened. Ivanhoe expects to continue filling key positions as it moves into execution mode.

Conference Call

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Ivanhoe Energy will host a conference call on Tuesday June 3,2008, for investors and analysts at 11:00 am EDT (8:00 am PDT) to discuss the acquisition. This conference call replaces the conference call previously scheduled for Monday June 2, 2008 as announced in our press release dated March 17, 2008.

The conference call may be accessed by dialling 1-866-540-8136 in Canada and the United States, or 1-416-340-8010 in the Toronto area and internationally. A simultaneous webcast of the conference call will be provided through www.ivanhoeenergy.com and www.newswire.ca/webcast. If you are unable to participate in the call, it will be archived for later playback by dialling 1-416-695-5800 and entering the pass code 3261239 followed by the number sign, or via www.ivanhoeenergy.com. The archived playback will be available until July 4, 2008.

STATEMENTS CONCERNING RESOURCES: The determination of oil and gas resources involves the preparation of estimates that have an inherent degree of associated risk and uncertainty. The estimation and classification of resources requires the application of professional judgment combined with geological and engineering knowledge to assess whether specific classification criteria have been satisfied. Statements in this press release concerning \"resources\" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, of the ability to produce in the future the resources described. Actual resources and, if commenced, future production will differ from the estimates provided herein, and the difference may be significant.

Except for volumes described as \"discovered petroleum initially-in-place\", all bitumen resource volumes referred to in this press release have been classified as \"contingent resources\" within the meaning of the Canadian Oil & Gas Evaluation Handbook (COGE Handbook). The term \"contingent resources\" is defined in the COGE Handbook as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political, and regulatory matters, or a lack of markets. It is appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage. Contingent resources are further classified in accordance with the level of uncertainty associated with the estimates and may be subclassified based on project maturity and/or characterized by their economic status.

Estimates of resources, which always involve uncertainty, are quoted herein as a range according to the level of confidence associated with the estimates. The \"best estimate\" is considered to be the best estimate of the quantity of bitumen resources that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. The \"low estimate\" is considered to be a conservative estimate of the quantity that will be actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. The \"high estimate\" is considered to be an optimistic estimate of the quantity that will be actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate.

The contingencies that currently prevent the contingent resources referred to herein from being classified as reserves are a lack of regulatory approval, the absence of a firm development plan, and the uncertainty of funding approval for development. There is no certainty that it will be commercially viable to produce any portion of the contingent resources referred to in this press release.

The term \"discovered petroleum initially-in-place\" is equivalent to discovered resources, and is defined in the COGE Handbook to mean that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of discovered petroleum initially-in-place includes production, reserves, and contingent resources; the remainder is unrecoverable.

Cautionary Note to U.S. Investors -- The Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this press release, such as contingent bitumen resources and discovered petroleum initially-in-place that the SEC\'s guidelines strictly prohibit us from including in filings with the SEC. Investors are urged to also consider closely the disclosure in our Form 10-K for the fiscal year ended December 31, 2007, available from our website. You can also obtain this form from the SEC website at www.sec.gov.

The reference herein to production levels at Petro-Canada\'s MacKay River project is based on publicly available information. The reference herein to the similarity between the Lease 10 reservoir characteristics and those of the MacKay River project is based on Ivanhoe\'s internal assessment.

FORWARD-LOOKING STATEMENTS: This document includes forward-looking statements, including forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements concerning Ivanhoe Energy\'s preliminary agreement with Talisman to acquire all of Talisman\'s working interest in three oil sand leases (leases 10, 50 and 6), the conditions of the closing of the transactions contemplated by the preliminary agreement, Ivanhoe Energy\'s ability to obtain the financing necessary to pay the portion of the purchase price not financed by Talisman, Ivanhoe Energy\'s plan to establish its first integrated HTL heavy-oil project on Lese 10, the anticipated production capacity of the proposed HTL plant, the anticipated quantities of recoverable barrels of bitumen from leases 10 and 50 and other statements which are not historical facts. When use in this document, the words such as \"could\", \"plan\", \"estimate\", \"anticipate\", \"intend\", \"may\", \"potential\", \"should\", and similar expressions relating to matters that are not historical facts are forward-looking statements. Although Ivanhoe Energy believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual result to differ from these forward-looking statements include the possibility that the company will be unable to raise financing or that the conditions of the closing of the transaction are not fulfilled, the potential that the company\'s projects will experience technological and mechanical problems, new product development will not proceed as planned, the HTL technology to upgrade bitumen and heavy oil may not be commercially viable, samples form the Athabasca bitumen test may not have the product qualities anticipate, market acceptance of the HTL technology may not be as anticipate, Ivanhoe Energy\'s lack of history in developing commercial HTL opportunities, geological conditions in reservoirs may not result in commercial levels of oil and gas production, the availability of drilling rigs and other support services, uncertainties about the estimates of the reserves, the risk associates with doing business in foreign countries, environmental risks, changes in product prices, our availability to generate cash flow and raise capital as and when required, competition and other risks disclosed in Ivanhoe Energy\'s Annual Report on Form 10-K files with the U.S. Securities and Exchange Commission on EDGAR and the Canadian Securities Commissions on SEDAR.

SOURCE: Ivanhoe Energy Inc.

Investors Contact: Ian Barnett, (647) 203-6588, Bill Trenaman, (604) 688-8323; Media Contact: Bob Williamson, (604) 608-8323; Website: www.ivanhoeenergy.com